Can a Reality TV Appearance Sink a Small Business?

Gordon Ramsey's reality show is calling it quits, much like many of the 77 restaurants he's given advice to over the years.

"Kitchen Nightmares," the reality show featuring celebrity chef Gordon Ramsay trying to save floundering restaurants will soon be ending its long run, Ramsay recently announced on his blog. To commemorate the show, New York Magazine's Grub Street looked at how the 77 American restaurants featured on the Fox Network show fared after appearing on the program.

The results? Only about 39 percent of the restaurants are still open, while the remaining 61 percent have closed. Even more discouraging: 30 percent of the businesses closed within one year of appearing on the show.

Of course, the businesses featured on the show were those already teetering on the brink of survival—and restaurants have notoriously high failure rates. But the outcome of the restaurants featured on "Kitchen Nightmares" does make one wonder: Does appearing on a reality TV show really help a business? Or can it do more harm than good?

In the case of "Kitchen Nightmares," the negative publicity created by the show—and Ramsay’s oft-quoted over-the-top insults of the owners and chefs—could have harmed the reputations of many of the restaurants featured on the show, according to Bill Bradley on The Huffington Post. (Last year, Amy’s Baking Company in Scottsdale, Arizona received much publicity after the show depicted the owners Amy and Samy Bouzaglo pocketing servers’ tip money. Interestingly, Amy’s is among the restaurants still open after appearing on the show.)

But even on reality shows that don’t focus on exposing a business’s dark side, the publicity and PR received from appearing on them doesn’t always pay off as expected.

ABC’s "Shark Tank" features entrepreneurs pitching their ideas to well-known investors, including real-estate mogul Barbara Corcoran and Dallas Mavericks owner Mark Cuban. While the success stories often receive the most publicity—and there are many of those—there are plenty of businesses that also get turned down by the sharks. And in some cases, some of those businesses or products fail.

Toygaroo is perhaps the most high-profile "Shark Tank" failure. The company, a subscription toy rental service, received $200,000 in funding from Cuban and fellow investor Kevin O’Leary in exchange for 35 percent of the company’s equity. However, just over a year later, the company filed for bankruptcy, apparently due to high amounts of debt. O’Leary later said it was a case of “bad management” and that he and Cuban ultimately decided to cut their losses.

The lesson from all this: Reality TV can help entrepreneurs who already have a solid business model and PR savvy, and are ready to take off. But it can also sink a business that’s already struggling, suffers from poor leadership or is simply not ready for such wide-scale attention.